THE EFFECT OF INFORMATION TECHNOLOGY ON ACCOUNTING RECONCILIATION (A CASE STUDY OF THE BANKING INDUSTRY)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The introduction and usage of information and communication technology ideas, techniques, policies and appliance techniques to accounting services has become vital, a top priority a concern to mostly everyaccountant and perhaps a must have for local and global competitiveness.

Information Technology as we all know is the mechanization, robotization of processes, controls, and information affair using computers, telecommunications, software etc.  Most of, if not all the banking services have been metamorphosed and enhanced as a result of the implementation of ICT and these changes can be seen on the accounting reconciliation, account opening, customer account mandate, and transaction processing and recording.IT to a large extent helps customers to confirm, ratify their account numbers and also receive instruction on when and how to receive their chequebooks, credit and debit cards.

Accounting reconciliation is viewed as the act of analogize transactions from the accounting records against those presented on the bank statements or records. Generally, expenses are carefully looked into on monthly basis and they are being charged to a cost center in other to make sure that all the expenses have been adequately and correctlybilled.It is also seen as a guide for validating that the balance in a chequebook matches the same bank statement. This is naturally done by preparing a bank reconciliation statement.

Accounting being the art of keeping record, arranging in segments or in other and summing up in an ordered manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof  has been enhance through the implementation of information technology. Accounting is a study that has had a significant impact on bankers, accountants, business men and women, organizations, to mention but a few. It is an information system that takes care of all the processes and conveys financial information about an economic entity. Enhancements in information technology have single handedlyupgraded accounting reconciliation systems and significantly improved the economic life. Computers and other digital technologies have maximized office efficiency facilitating the vast and continuous exchange of documents, research, collaboration with far-flung partners and the gathering and analysis of data. So far, information technology has given all manner of individual economic factors the new valuable tools for recognizingand chasing economic and business opportunities.

Binging in the idea of IT in the business world, it is crafted to assist management in their stewardship function, reinforce management in their everyday activities and decision making. Just like in the previous years, machines where introduced to assist in the accounting reconciliation.Over the years, the improvements on information technology have transformed accounting reconciliation systems and its activities. There were many improvements in the Accounting Information System (AIS). This is crafted to assist in the management and control of processes that has to do with or isrelated to an organizations’ economic and financial area. Accounting reconciliation system is essential for majority of the business entities. The significant improvements of technology have lead in the creation a computerized accounting reconciliation system which is mainlyaccepted by business entities at present. This has created a competitive market. Hence, organizations need to grow their systems in order to meet their information needs for better decision making.

STATEMENT OF THE GENERAL PROBLEM

The desire to undertake a systematic investigation on the impact of information technology on account reconciliation is due to difficulties faced by business organizations and the banking industry to achieve their service rendering objective, large market share and target profit as part of the purpose of their existence. This is because the quality of services rendered by some organisation has created a negative multiplier effect on the banking industry as their chance of optimizing profit is affected.

There are lots of complaints from the beneficiaries of banking services or bank customers that poor information technology result to inefficient application of computer to the accounting system of the banking industry. Some of the poor information and communication technology (ICT)   products use in the banking industry include Automated Teller Machine (ATM), smart cards, telephone banking, alert, electronic funds transfer, electronic data interchange, electronic home and office banking.

In this study the researcher seeks to find out how the information technology has impacted on account reconciliation of the banking industries in Nigeria using the guarantee trust bank as the case study.  

AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the effect of information technology on account reconciliation. Other specific objectives of the study include;

1. To determine the general importance of information technology.
2. To examine the need for information technology in accounting.
3. To determine the contributions of information technology on organizational growth and development.
4. To examine the benefits of account reconciliation.
5. To recommend ways of further improvement of account reconciliation in Nigerian business organizations and the banking sector.

RESEARCH QUESTIONS

1. What is the general importance of information technology?
2. What is the need for information technology in accounting?
3. What are the contributions of information technology on organizational growth and development?
4. What are the benefits of account reconciliation?
5. What are the ways of further improvement of account reconciliation in Nigerian business organizations and the banking sector?

RESEARCH HYPOTHESIS

H0: Information technology has no effect on account reconciliation.

H1: Information technology has an effect on account reconciliation.

SIGNIFICANCE OF THE STUDY

The study would greatly benefit business organizations, the banking sector and relevant stakeholders as it would reveal the effect of information technology on account reconciliation. The study would also be of immense benefit to students, researchers and scholars who are interested in developing further study on the subject matter.

SCOPE AND LIMITATION OF THE STUDY

The study is restricted to the effect of information technology on account reconciliation using the guaranty trust bank as a case study.

LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.